6 ms·

Key quotes: --- Buffet: “I don’t like its location, and I’ve reevaluated that.” “I feel better about the capital that we’ve got deployed in Japan than in Ta

by tikkun 3y ago

Key quotes: --- Buffet: “I don’t like its location, and I’ve reevaluated that.” “I feel better about the capital that we’ve got deployed in Japan than in Taiwan” “[TSMC is] one of the best-managed companies and [most] important companies in the world.” “There’s no one in the chip industry that’s in their league, at least in my view” “Marvelous people and marvelous competitive position and everything, [but] I’d rather find it in the United States.” Buffett said his reassessment of the company was in “light of certain things that were going on.” He had previously pointed to geopolitical tensions as a concern. --- TSMC is a key supplier of many companies, including Nvidia. Not an ideal situation. What do people expect plays out over the next few years?

Clubber 3y ago
I believe TSMC will diversify away from Taiwan and they will probably need to do it as quickly as they can. This is already happening; they are building in Arizona, but it takes a while to build a foundry and get it running. They should have started a decade ago. Hong Kong was probably the catalyst today. Companies who rely on TSMC will also need to diversify as much as possible as quickly as they can incase TSMC can't. I'm not sure if Berkshire doesn't think they can do it, or just doesn't like the risk. They seem fairly risk-averse. Once this happens China will probably feel more emboldened to take Taiwan because US industry won't be so reliant on it and less likely to intervene. I'm not saying the US won't, but they would be less incentivized economically and in regards to self interest. I don't think the populace has the stomach for a long protracted, potentially nuclear war over Taiwan. China will become significantly more isolated on the global scale if this happens, but they seemed determined to do it. They've fallen into a single-man dictatorial power structure under Xi. The China global economic experiment seems to have failed. It's a waiting game.
- methodical 3y ago
  Want to point out that the global economic importance of Taiwan will decrease if TSMC is able to diversify away from Taiwan in any significant manner, meaning China stands to gain significantly less economically by invading Taiwan. Most of Taiwan's importance currently seems to be directly related to their position as the primary supplier of chips for global corporations.
  - Clubber 3y ago
    Yes, you are absolutely correct economically, but they deem it to be a national honor thing. Dictators turn to nationalism when they become unpopular. https://www.bbc.com/news/world-asia-china-59900139 https://www.bbc.com/news/world-asia-china-59900139
  - newsclues 3y ago
    No. China has wanted Taiwan since before TSMC was major factor. This is about geopolitics, and fulfilling the destiny of the Party/Nation that has for decades been embarrassed that their (in their eyes) territory was held by others and supported by the West.
    - methodical 3y ago
      Sorry, I should've specified that I was specifically talking about potential economic incentives for China. I am aware to a lesser degree that they wanted the land for alternate reasons.
- randomopining 3y ago
  Putin showed that the autocrats mean business. Xi is cut from the same cloth.
javajosh 3y ago
The US should offer to pay for relocation of all TSMC personnel and rebuilding of all fabs here on US soil. I'm not sure there's much of an upper limit to what this would be worth. $2B? $10B? Something like that. Of course the patriots won't want to leave - and rightly so. It's their home, and democracy is worth defending against autocracy. But the offer should be made, IMHO EDIT: Estimate is off by 100x. I also agree that Taiwan would not like to lose the leverage TSMC gives them. I still think the offer should be made.
- ThalesX 3y ago
  Perhaps there's an argument to be made about U.S. hegemony when such proposals concerning the strategic assets of another country are considered. What if we Europeans devised a plan to acquire all strategic manufacturing assets from the U.S. - including tech, military, and energy sectors - along with their personnel, and relocated them to the EU? Wouldn't the federal government likely have something to say about that?
  - bastardoperator 3y ago
    We call that Capitalism. If you don't have a plan to stop it, assume it's going to happen. I'd like to refer you back to the documentary idiocracy. There is line in that film that seems to resonate with many humans especially Americans, "I like money, you like money too? We should hang out"
    - ThalesX 3y ago
      I'm not buying free market capitalism with regards to strategic resources of another country. If 'we call that capitalism' is all it took, the US wouldn't need the military it has. Again, this feels like a simplistic view about a country with its own vision of the future...
      - bastardoperator 3y ago
        You should because that's what these companies or "resources" are actually thinking. If you asked the CEO or shareholders who the company belongs to they'll claim it's theirs and that where it operates from is irrelevant. The US has the military it has because of capitalism, warfare costs tremendous amounts of money and resources and so a lucrative market was birthed.
gjsman-1000 3y ago
I tell my friends and family, "If you ever see a headline saying Taiwan is getting blockaded, or receiving airstrikes, or whatever it may be, drop what you are doing and run to the nearest Apple Store and buy everything you can afford. If you still have money, go to every Best Buy and repeat. Anything Apple, along with Game Consoles and Nintendo Switch Game Cards, will be among the worst affected. If it doesn't work out, you'll sell it for only a 10%-20% loss. If it does work out, it will be years before you can buy those products new again." Especially Apple. Apple has an extremely short production buffer. Allegedly, they have complete inventory turnover every five days. https://www.theverge.com/2020/3/13/21177024/apple-just-in-time-manufacturing-china-coronavirus-supply-chain https://www.theverge.com/2020/3/13/21177024/apple-just-in-ti...
- reaperman 3y ago
  I suspect the temporal order will be reversed. From what I hear, China will have to spend months amassing troops and material near the coast, in a way which cannot be hidden, giving the world at least 3 months to "prepare". I expect speculators will deplete Apple Stores' JIT stocks well before any belligerence begins. Some of those speculators may place their bets too early and lose money.
themodelplumber 3y ago
> What do people expect plays out over the next few years? China fantasy version: China takes Taiwan and TSMC and everybody minds their own business. China miraculously converts this move into de facto monopoly. America can't get chips and tries to negotiate with China's tight new ally Mexico, losing California in the process! Holy sh*! Maybe more real: China takes TSMC like a chess piece, tries to put it back on the board like in Xia...Shogi (sorry, my Japanese is better here). Except somehow (sanctions, brain drain, sabotage, etc) the piece metaphorically crumbles to ash. Buffett is still so very glad to be out. Another one: Taiwan and foreign partners with lots to lose like US, Japan, and SK successfully turn Taiwan into a meat grinder. TSMC becomes a godforsaken piece of charred land. Miraculously a very-TSMC-like corporation appears split between those countries with some kind of Taiwanese stake as well. Lots of possibilities to think about. Could happen in the next 5-20Y rather than a few though. WW2 for example had a very long build up from expeditionary moves to the bigger strategic conflict stuff if you look from the Japanese perspective, and this pattern has a lot of benefits to China given factors like US administration churn, etc.
- reaperman 3y ago
  Interesting how none of these imagined scenarios involve China not attacking Taiwan. Like, for example, Xi dies slightly earlier than expected and the next, younger, head of state doesn't have the "Oh god I need to cement my 'legacy' before I turn 90 years old" problem and can indefinitely kick the Taiwan can down the road.
  - cromwellian 3y ago
    That would be a great scenario but people were hoping that about Putin and unfortunately it didn’t happen in time to save Ukraine. Also we don’t know if whoever follows Xi will be better or worse.
    - randomopining 3y ago
      The fact that Putin and Xi are close and Putin made a move unthinkable a few years ago shows that these autocrats mean serious business. It's not some fiction novel story anymore.
antoniuschan99 3y ago
Hearing from Chinese from China ppl they think western media likes pushing the narrative of using force. They think most likely scenario is through political means. Kuomintang is already Pro Beijing.
- dehrmann 3y ago
  https://apnews.com/article/china-fighter-jets-harassment-taiwan-9156541b4138cfa3865b7232ee6a8970 https://apnews.com/article/china-fighter-jets-harassment-tai... > China’s military flew 38 fighter jets and other warplanes near Taiwan, the Taiwanese defense ministry said Friday, in the biggest such flight display since the large military exercise in which it simulated sealing off the island earlier in April. I'll buy that Chinese in China have that view, but flying 38 fighters near Taiwanese airspace is China actually using force. At the same time, I do see China's larger gripe. Between Japan, South Korea, Taiwan, The Philippines, and Singapore, China's access to the open seas is boxed-in by western allies. Russia has a similar gripe with a warm-water port in Crimea and NATO slowly closing in on Russia by growing the alliance east.
  - ttepasse 3y ago
    > Russia has a similar gripe with a warm-water port in Crimea … Russia has multiple ports on its own black sea coast and before 2014 was building them out, especially Novorossiysk, to host the Black Sea Fleet, for when the lease of Sevastopol runs out.
  - antoniuschan99 3y ago
    Yea I totally agree. That’s literally the thing I thought about as a rebuttal. This Johnny Harris video elaborates on it as well https://youtu.be/VNZ0so0LCoM https://youtu.be/VNZ0so0LCoM But at the same time. You would think that if China does in fact believe Taiwan is theirs, then why would they bomb their own (eg. valuable TSMC, etc) infrastructure vs play the long game and take over politically. Also, their sorties are more like a dog barking. It’s showing force, like North Korea doing those parades and launching missiles.
- rasz 3y ago

by tikkun 3y ago

Clubber 3y ago

I believe TSMC will diversify away from Taiwan and they will probably need to do it as quickly as they can. This is already happening; they are building in Arizona, but it takes a while to build a foundry and get it running. They should have started a decade ago. Hong Kong was probably the catalyst today. Companies who rely on TSMC will also need to diversify as much as possible as quickly as they can incase TSMC can't. I'm not sure if Berkshire doesn't think they can do it, or just doesn't like the risk. They seem fairly risk-averse. Once this happens China will probably feel more emboldened to take Taiwan because US industry won't be so reliant on it and less likely to intervene. I'm not saying the US won't, but they would be less incentivized economically and in regards to self interest. I don't think the populace has the stomach for a long protracted, potentially nuclear war over Taiwan. China will become significantly more isolated on the global scale if this happens, but they seemed determined to do it. They've fallen into a single-man dictatorial power structure under Xi. The China global economic experiment seems to have failed. It's a waiting game.

methodical 3y ago
Want to point out that the global economic importance of Taiwan will decrease if TSMC is able to diversify away from Taiwan in any significant manner, meaning China stands to gain significantly less economically by invading Taiwan. Most of Taiwan's importance currently seems to be directly related to their position as the primary supplier of chips for global corporations.
- Clubber 3y ago
  Yes, you are absolutely correct economically, but they deem it to be a national honor thing. Dictators turn to nationalism when they become unpopular. https://www.bbc.com/news/world-asia-china-59900139 https://www.bbc.com/news/world-asia-china-59900139
- newsclues 3y ago
  No. China has wanted Taiwan since before TSMC was major factor. This is about geopolitics, and fulfilling the destiny of the Party/Nation that has for decades been embarrassed that their (in their eyes) territory was held by others and supported by the West.
  - methodical 3y ago
    Sorry, I should've specified that I was specifically talking about potential economic incentives for China. I am aware to a lesser degree that they wanted the land for alternate reasons.
randomopining 3y ago
Putin showed that the autocrats mean business. Xi is cut from the same cloth.

javajosh 3y ago

The US should offer to pay for relocation of all TSMC personnel and rebuilding of all fabs here on US soil. I'm not sure there's much of an upper limit to what this would be worth. $2B? $10B? Something like that. Of course the patriots won't want to leave - and rightly so. It's their home, and democracy is worth defending against autocracy. But the offer should be made, IMHO EDIT: Estimate is off by 100x. I also agree that Taiwan would not like to lose the leverage TSMC gives them. I still think the offer should be made.

ThalesX 3y ago
Perhaps there's an argument to be made about U.S. hegemony when such proposals concerning the strategic assets of another country are considered. What if we Europeans devised a plan to acquire all strategic manufacturing assets from the U.S. - including tech, military, and energy sectors - along with their personnel, and relocated them to the EU? Wouldn't the federal government likely have something to say about that?
- bastardoperator 3y ago
  We call that Capitalism. If you don't have a plan to stop it, assume it's going to happen. I'd like to refer you back to the documentary idiocracy. There is line in that film that seems to resonate with many humans especially Americans, "I like money, you like money too? We should hang out"
  - ThalesX 3y ago
    I'm not buying free market capitalism with regards to strategic resources of another country. If 'we call that capitalism' is all it took, the US wouldn't need the military it has. Again, this feels like a simplistic view about a country with its own vision of the future...
    - bastardoperator 3y ago
      You should because that's what these companies or "resources" are actually thinking. If you asked the CEO or shareholders who the company belongs to they'll claim it's theirs and that where it operates from is irrelevant. The US has the military it has because of capitalism, warfare costs tremendous amounts of money and resources and so a lucrative market was birthed.

gjsman-1000 3y ago

I tell my friends and family, "If you ever see a headline saying Taiwan is getting blockaded, or receiving airstrikes, or whatever it may be, drop what you are doing and run to the nearest Apple Store and buy everything you can afford. If you still have money, go to every Best Buy and repeat. Anything Apple, along with Game Consoles and Nintendo Switch Game Cards, will be among the worst affected. If it doesn't work out, you'll sell it for only a 10%-20% loss. If it does work out, it will be years before you can buy those products new again." Especially Apple. Apple has an extremely short production buffer. Allegedly, they have complete inventory turnover every five days. https://www.theverge.com/2020/3/13/21177024/apple-just-in-time-manufacturing-china-coronavirus-supply-chain https://www.theverge.com/2020/3/13/21177024/apple-just-in-ti...

reaperman 3y ago
I suspect the temporal order will be reversed. From what I hear, China will have to spend months amassing troops and material near the coast, in a way which cannot be hidden, giving the world at least 3 months to "prepare". I expect speculators will deplete Apple Stores' JIT stocks well before any belligerence begins. Some of those speculators may place their bets too early and lose money.

themodelplumber 3y ago

> What do people expect plays out over the next few years? China fantasy version: China takes Taiwan and TSMC and everybody minds their own business. China miraculously converts this move into de facto monopoly. America can't get chips and tries to negotiate with China's tight new ally Mexico, losing California in the process! Holy sh*! Maybe more real: China takes TSMC like a chess piece, tries to put it back on the board like in Xia...Shogi (sorry, my Japanese is better here). Except somehow (sanctions, brain drain, sabotage, etc) the piece metaphorically crumbles to ash. Buffett is still so very glad to be out. Another one: Taiwan and foreign partners with lots to lose like US, Japan, and SK successfully turn Taiwan into a meat grinder. TSMC becomes a godforsaken piece of charred land. Miraculously a very-TSMC-like corporation appears split between those countries with some kind of Taiwanese stake as well. Lots of possibilities to think about. Could happen in the next 5-20Y rather than a few though. WW2 for example had a very long build up from expeditionary moves to the bigger strategic conflict stuff if you look from the Japanese perspective, and this pattern has a lot of benefits to China given factors like US administration churn, etc.

reaperman 3y ago
Interesting how none of these imagined scenarios involve China not attacking Taiwan. Like, for example, Xi dies slightly earlier than expected and the next, younger, head of state doesn't have the "Oh god I need to cement my 'legacy' before I turn 90 years old" problem and can indefinitely kick the Taiwan can down the road.
- cromwellian 3y ago
  That would be a great scenario but people were hoping that about Putin and unfortunately it didn’t happen in time to save Ukraine. Also we don’t know if whoever follows Xi will be better or worse.
  - randomopining 3y ago
    The fact that Putin and Xi are close and Putin made a move unthinkable a few years ago shows that these autocrats mean serious business. It's not some fiction novel story anymore.

antoniuschan99 3y ago

Hearing from Chinese from China ppl they think western media likes pushing the narrative of using force. They think most likely scenario is through political means. Kuomintang is already Pro Beijing.

dehrmann 3y ago
https://apnews.com/article/china-fighter-jets-harassment-taiwan-9156541b4138cfa3865b7232ee6a8970 https://apnews.com/article/china-fighter-jets-harassment-tai... > China’s military flew 38 fighter jets and other warplanes near Taiwan, the Taiwanese defense ministry said Friday, in the biggest such flight display since the large military exercise in which it simulated sealing off the island earlier in April. I'll buy that Chinese in China have that view, but flying 38 fighters near Taiwanese airspace is China actually using force. At the same time, I do see China's larger gripe. Between Japan, South Korea, Taiwan, The Philippines, and Singapore, China's access to the open seas is boxed-in by western allies. Russia has a similar gripe with a warm-water port in Crimea and NATO slowly closing in on Russia by growing the alliance east.
- ttepasse 3y ago
  > Russia has a similar gripe with a warm-water port in Crimea … Russia has multiple ports on its own black sea coast and before 2014 was building them out, especially Novorossiysk, to host the Black Sea Fleet, for when the lease of Sevastopol runs out.
- antoniuschan99 3y ago
  Yea I totally agree. That’s literally the thing I thought about as a rebuttal. This Johnny Harris video elaborates on it as well https://youtu.be/VNZ0so0LCoM https://youtu.be/VNZ0so0LCoM But at the same time. You would think that if China does in fact believe Taiwan is theirs, then why would they bomb their own (eg. valuable TSMC, etc) infrastructure vs play the long game and take over politically. Also, their sorties are more like a dog barking. It’s showing force, like North Korea doing those parades and launching missiles.
rasz 3y ago